Market Dynamics: Supply, Demand, and Competition
Combined Market Trading Activities of a Particular Product
Suppliers’ Demand
Made when a certain amount of goods are willingly acquired by applicants at a fixed price. The demand curve is a good graphical representation of the demand function, which shows different amounts of that property buyers are willing to acquire at each price.
Disposable Income
- Inferior goods: Are less with increasing demand.
- Normal goods: The number increases in direct proportion to income.
- Luxury goods: Consumption increases with an increase in rent.
Offer
Much of a good that companies are willing to produce at a specified price. The supply curve is a good graphical representation of the function of supply, showing that different amounts of the well that companies are willing to produce at each price.
Market Equilibrium
That point in the match that satisfies both consumers’ and businesses’ plans, so it satisfies both exchanges.
The Market and Competition
- Brings together all activities of the purchase of a product made by the companies and the plaintiffs.
- The axis are based on market economies and mixed economies.
- Is a mechanism that promotes the exchange by the free interplay of supply and demand.
Perfectly Competitive Market Rates
In a perfectly competitive market, all goods and services are voluntarily exchanged for cash at the price fixed by the market as a result of the free operation of the laws of supply and demand. All firms compete on equal conditions.
Monopoly
One unique company covers all demand and has the capacity to decide how much to produce and at what price.
Imperfectly Competitive Markets
- Monopoly: The market where there is no competition, i.e., a unique company produces all the good or service that exists, therefore it has full capacity to influence price or quantity produced.
- Oligopoly: Few businesses operate, but they are large enough to influence the price if either decides to change its bid. Examples include the oil market and mobile telephony companies.
- Monopolistic Competition: Many companies act in the market with similar products with the same function or utility, giving their specific differentiation products to create loyal customers, therefore they can influence the price.
Criteria to Classify Markets
- Market concentration: The number of firms.
- Influence on the price: The vendors have more impact on the price.
- Degree of homogeneity: All other similar products.
- Intensity of competition: Different companies sell more.
- Degree of transparency: How much information buyers and sellers have on what occurs in the market.
- Freedom of input and output: The barriers.
Barriers to Entry
Factors that prevent or hamper the entry of new firms into a market.
- Cost advantages: If a company can produce cheaper, they can offer a lower price, making it difficult for new businesses to enter.
- Product differentiation: When the quality, design, or function of the products are so significant that they retain consumers.
- Capital investments: The cost of investments hinders the entry of other firms.
Exit Barriers
Costs to leave the market.
Perfect Competition Market Developments
- Growth: When extraordinary profits are made.
- Saturation: With the input of new vendors, the supply increases.
- Stagnation: The extraordinary profits disappear, and some companies leave.
- Stabilization: More companies are removed, and few survivors recover.